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Title: Perfect Equilibrium in a Bargaining Model
Author: Ariel Rubinstein
Journal: Econometrica
Volume: 50
Number: 1
Pages: 97--110
Year: 1982
Abstract: Two players have to reach an agreement on the partition of a pie of size 1. Each has to make in turn, a proposal as to how it should be divided. After one player has made an offer, the other must decide either to accept it, or to reject it and continue the bargaining. Several properties which the players' preferences possess are assumed. The Perfect Equilibrium Partitions (P.E.P.) are characterized in all the modesls satisfying these assumptions. Specially, it is proved that when every player bears a fixed bargaining cost for each period (c1 and c2), then: (i) if c1 < c2 the only P.E.P. gives all the pie to 1; (ii) if c1 > c2 the only P.E.P. gives to 1; only c2. In the case where each player has a fixed discounting factor (d1 and d2) the only P.E.P. is (1 - d2)/(1 - d1d2)

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@Article{rubinstein82a,
  author =	 {Ariel Rubinstein},
  title =	 {Perfect Equilibrium in a Bargaining Model},
  journal =	 {Econometrica},
  year =	 1982,
  volume =	 50,
  number =	 1,
  pages =	 {97--110},
  abstract =	 {Two players have to reach an agreement on the
                  partition of a pie of size 1. Each has to make in
                  turn, a proposal as to how it should be
                  divided. After one player has made an offer, the
                  other must decide either to accept it, or to reject
                  it and continue the bargaining. Several properties
                  which the players' preferences possess are
                  assumed. The Perfect Equilibrium Partitions (P.E.P.)
                  are characterized in all the modesls satisfying
                  these assumptions. Specially, it is proved that when
                  every player bears a fixed bargaining cost for each
                  period (c1 and c2), then: (i) if c1 < c2 the
                  only P.E.P. gives all the pie to 1; (ii) if c1 >
                  c2 the only P.E.P. gives to 1; only c2. In the
                  case where each player has a fixed discounting
                  factor (d1 and d2) the only P.E.P. is (1 -
                  d2)/(1 - d1d2)},
  keywords =     {economics game-theory negotiation},
  url = 	 {http://jmvidal.cse.sc.edu/library/rubinstein82a.pdf},
  googleid = 	 {fD4OGcjRfdkJ:scholar.google.com/},
  cluster = 	 {15671912935663222396}
}
Last modified: Wed Mar 9 10:13:33 EST 2011